Tuesday, May 18, 2010

Poor uptake of iPhone and Kindle in India- Why’s and Why not’s?

“Eight months after its August 2008 launch, total sales of iPhone were reportedly less than 20,000 units.”

“Estimates of Kindle sales in India, since its October 2009 launch, range from a few hundred to 1000 units.”

The iPhone and Kindle were never expected to have mass uptake in India in their early days. However, it is surprising that sales figures have been so utterly disappointing.High pricing of these devices and poor data speeds in India (especially in the case of iPhone) have been attributed as the main reasons for dismal uptake. Though these factors have some role to play in the India failure of iPhone and Kindle, they seem to be overhyped. Here is why.

Pricing

The iPhone and Kindle, in India, are primarily targeted towards the creamy layer in metro circles and the English reading elite respectively. For these consumers, pricing is not the foremost consideration before purchasing a device.Smartphone shipments in India numbered 480,000 during the third quarter of 2009 and many of these devices such as Samsung’s Omnia, Nokia’s N96, and Blackberry Bold were as highly priced as the iPhone. Similarly, the English reading elite segment is estimated to number nearly 11 million and with very little competition from other e- reader’s, Kindle uptake could definitely have been better despite its high price.

Slow Data Rate

The lack of 3G in India and the inconsistent performance of EDGE networks is another factor often attributed to the poor sales of these devices, especially the iPhone. The argument is that the absence of 3G networks renders some of the functionalities of the iPhone useless, thereby inhibiting user experience. In case of the Kindle, some believe, that one of its most attractive features, which enables users to download a complete book in 60 seconds using 3G connection, will not deliver on promise. However, consumers in India do not necessarily buy phones and other gadgets for functional reasons. The social value and status symbol associated with a device takes precedence in many cases. This is one of the reasons why 3G compatible phones have been readily available in the Indian market since 2005!

The main reasons why the iPhone and Kindle have not taken the Indian market by storm lie elsewhere.

Lack of push from Apple and Amazon

If Apple and Amazon desired, the sales of iPhone and Kindle could have been much higher than where they presently stand. As pointed out earlier, many Indian consumers chose a product based on its perceived societal value. The marketing and advertizing initiatives of both Apple and Amazon have been negligible and hence have failed to create a brand recall for their products. Interest (and hence sales) in the iPhone and Kindle would have been much higher if Apple and Amazon had launched extensive promotion campaigns to highlight their products. Instead, they have chosen to stay dormant in the Indian market.

Lock- in

While the iPhone is available only to subscribers on Airtel and Vodafone networks, Kindle users are limited to books from the Amazon store. Such tie-in’ not only hinder user uptake but also limit distribution (in the case of iPhone). Unlike their counterparts in US and Europe, Indian operators do not have the experience of selling handsets aggressively.As a result, the distribution of iPhone was negatively impacted by Apple’s decision to rely only on Airtel and Vodafone.

Grey/Overseas Market Purchases

Many gadget freaks in India chose to purchase these devices from grey or overseas markets either to avoid operator and application tie-in or save on overhead costs. Several users buy the iPhone from countries such as the US and then jailbreak it in order to accept any SIM without restriction or use applications that are not available from Apple's store. In case of the Kindle, a purchase in the US saves users additional shipping costs and custom duty.

India is an attractive market for both the iPhone and Kindle. However, for device sales to pick up, Apple and Amazon need to adopt an aggressive strategy and focus more positively on the Indian market.